company accounting Financing company operations参考.pptVIP

* * * * * * * * * * * * * * * * * * * * * * * * * * Share options (Example 6) 30 June 2012 (same entry for a) and b)) Dr Wages expense 10,000 Cr Options 10,000 Issue of options to CEO a) 1 May 2013 Dr Cash 30,000 Dr Options 10,000 Cr Share capital 40,000 Exercising of options by CEO b) 30 June 2013 Dr Options 10,000 Cr Lapsed options reserve 10,000 Transfer of balance to a reserve account on the lapsing of the options Share options (Example 6) c) 30 June 2013 Dr Cash 10,000 Cr Options 10,000 Issuing of options 1 July 2012 - 30 June 2013 Dr Cash 27,000 Dr Options 10,000 Cr Share capital 36,000 Cr Lapsed options reserve 1,000 Exercising of 9,000 options to 30 June 2013 and transfer of balance to a reserve account on the lapsing of the options (10,000 x $1) (9,000 x $3) (1,000 x $1) Such shares either: Give the holder the right to be repaid his/her capital Or Give the company the right to repay the capital Main issue is the classification of such shares Are they equity, liabilities or a combination of both? Redeemable preference shares Shares can be redeemed from: Proceeds of a fresh issue of shares 2. Retained earnings Additionally, the company’s constitution may specify payment of a redemption premium which is paid from profit On redemption the shares are cancelled and cannot be reissued Redeemable preference shares - equity Dr Share Capital - Preference $x Cr Shareholders redemption $x Transfer of preference capital to redemption account Dr Shareholders redemption $x Cr Cash $x Redemption of preference shares Dr Cash/ Retained earnings $x Cr Share Capital - Ordinary $x Receipt of cash on issue of new shares Redeemable preference shares - equity Cash a/c applies to issues of new shares; retained earnings a/c applies to redemption from profits The shareholders redemption account is a clearing account Redeemable preference shares with the following characteristics are more in the nature of liabil